Corporate Finance and Treasury
Expert-defined terms from the Graduate Certificate in Treasury Management course at London School of Planning and Management. Free to read, free to share, paired with a professional course.
Corporate Finance and Treasury Glossary #
Corporate Finance and Treasury Glossary
Accounts Payable #
Money owed by a company to its suppliers for goods or services purchased on credit.
Accounts Receivable #
Money owed to a company by its customers for goods or services provided on credit.
Acquisition #
The process by which one company buys another company or a portion of its assets.
Amortization #
The process of spreading out the cost of an intangible asset over its useful life.
Asset Allocation #
The practice of spreading investments across different asset classes to reduce risk.
Balance Sheet #
A financial statement that shows a company's assets, liabilities, and equity at a specific point in time.
Capital Budgeting #
The process of evaluating and selecting long-term investment projects.
Capital Structure #
The mix of debt and equity used to finance a company's operations.
Cash Flow #
The movement of cash in and out of a business.
Corporate Governance #
The system of rules, practices, and processes by which a company is directed and controlled.
Cost of Capital #
The rate of return required by investors to compensate them for the risk of investing in a company.
Debt Financing #
Raising capital by borrowing money from lenders.
Dividend #
A payment made by a company to its shareholders from its profits.
Financial Statement Analysis #
The process of reviewing and analyzing a company's financial statements to make investment decisions.
Forecasting #
The process of estimating future financial outcomes based on historical data and trends.
Hedging #
Using financial instruments to reduce the risk of adverse price movements in assets or liabilities.
Initial Public Offering (IPO) #
The first time a company's stock is offered to the public.
Internal Rate of Return (IRR) #
The discount rate that makes the net present value of all cash flows from a project equal to zero.
Leverage #
The use of debt to finance a company's operations.
Liquidity #
The ability of a company to meet its short-term obligations.
Mergers and Acquisitions (M&A) #
The combining of two companies through a purchase or a merger.
Net Present Value (NPV) #
The difference between the present value of cash inflows and outflows over a specific period.
Operating Cash Flow #
The cash generated from a company's core business operations.
Profit and Loss Statement #
A financial statement that shows a company's revenues, expenses, and profits over a specific period.
Return on Investment (ROI) #
A measure of the profitability of an investment relative to its cost.
Risk Management #
The process of identifying, assessing, and controlling risks that could threaten a company's financial health.
Securities #
Tradable financial assets such as stocks and bonds.
Working Capital #
The difference between a company's current assets and current liabilities. It represents the funds available for day-to-day operations.
Treasury Management #
The management of a company's cash, investments, and financial risks to achieve its financial goals.
Treasury Operations #
The day-to-day activities involved in managing a company's cash and liquidity.
Treasury Policy #
A set of guidelines and procedures that govern a company's treasury activities.
Treasury Risk #
The potential for financial losses due to changes in interest rates, exchange rates, or other market conditions.
Treasury Systems #
Software tools used to streamline and automate treasury processes such as cash management, risk management, and reporting.
Working Capital Management #
The management of a company's current assets and liabilities to maximize efficiency and minimize risk.
Foreign Exchange Risk #
The risk of financial losses due to changes in exchange rates when dealing with foreign currencies.
Liquidity Risk #
The risk of not being able to meet short-term obligations due to a lack of cash or liquid assets.
Interest Rate Risk #
The risk of financial losses due to changes in interest rates affecting the value of assets or liabilities.
Market Risk #
The risk of financial losses due to changes in market conditions such as interest rates, exchange rates, or commodity prices.
Credit Risk #
The risk of financial losses due to the failure of a borrower to repay a loan or meet its obligations.
Treasury Management System (TMS) #
Software that helps companies manage their cash, investments, and financial risks more effectively.
Compliance #
The act of following rules, regulations, and laws set by governing bodies to ensure ethical and legal behavior.
Liquidity Management #
The process of managing a company's cash and short-term investments to maintain liquidity and meet financial obligations.
Counterparty Risk #
The risk of financial losses due to the failure of a counterparty to fulfill its contractual obligations.
Financial Planning #
The process of setting financial goals, creating a plan to achieve them, and monitoring progress.
Financial Risk #
The risk of financial losses due to market conditions, credit risk, interest rate risk, or other factors.
Financial Strategy #
A long-term plan that outlines how a company will achieve its financial goals.
Fundamental Analysis #
The process of evaluating a company's financial statements, management, and competitive position to determine its value.
Interest Rate Swaps #
Financial instruments used to exchange fixed-rate and floating-rate payments to manage interest rate risk.
Investment Policy #
A set of guidelines that govern a company's investment decisions and strategies.
Market Risk Management #
The process of identifying, assessing, and managing risks related to market conditions.
Net Working Capital #
The difference between a company's current assets and current liabilities, excluding cash and short-term debt.
Operating Cycle #
The time it takes for a company to convert its inventory into cash through sales.
Receivables Management #
The process of managing a company's accounts receivable to maximize cash flow and minimize bad debts.
Working Capital Ratio #
A financial ratio that measures a company's ability to pay off its short-term liabilities with its current assets.